It's not easy trying to come up with a successful forex trading system. In fact some people never manage to do so and end up losing lots of money. Other people find success through buying a commercial trading system or learning how to trade from a mentor or professional trader. So what are the characteristics of a profitable forex trading system?



Well everyone's system is different and unique in it's own way but a lot of the most profitable trading systems share the same qualities. The first of these qualities is repetition. The best systems find the same types of high probability set-ups and trade them over and over again.

This is the reason why technical analysis is used by so many forex traders to make trading decisions. Technical analysis is basically a way of displaying various trading patterns, so by finding a combination of technical indicators that are good at predicting future price moves, you can use these indicators to display these reoccurring and potentially profitable trading patterns.

Forex trading should be like a full-time job where you trade the same system every single day. Every trade should be like the preceding one, and there should be very little difference between one trade and the next. You need to develop a system that can detect future price moves with a reasonable success rate and then simply stick to this system all the time.

Another characteristic of a profitable trading system is that they will nearly always use solid money management rules. So they will only risk a small percentage of their bank on any one trade. A good system also generally applies strict stop loss rules and will target price moves that are further away than this stop loss level. This means that you can still make money from a particular trading system even if you have a modest win/loss ratio because your winning trades more than make up for your losing ones.

Some of the most profitable systems go one step further and will use a strict stop loss, but instead of having a fixed target price for exiting a trade, they will let their winning trades run for as long as possible with the use of a trailing stop. This is another way that people make money from forex trading without necessarily having a very high win/loss ratio.

So overall a profitable forex trading system will generally use a tight stop loss policy and will either have a greater profit objective or will let their winning trades run. They also trade the same trading patterns over and over again and do not deviate from this strategy.